By Tom Still
MADISON – The points on Wisconsin’s free-trade compass have shifted. Ten years ago, the magnetic arrows were predominantly east-west; Wisconsin’s largest trading partners were clustered in the Far East and Europe. Today, the compass also points north-south. Canada is the state’s No. 1 trading partner by far and Mexico has scrambled up the list to No. 2, as total exports to both nations exceeded $6 billion in 2004.
The North American Free Trade Agreement is a major reason why Wisconsin’s trade axis has changed – or, at least, become much more balanced. The barriers removed by NAFTA’s enactment in 1994 have allowed Wisconsin companies to sell more goods and services in Canada and Mexico, led to enduring business partnerships, and generally helped consumers across all borders.
There is every reason to believe the proposed Central America Free Trade Agreement, or CAFTA, would serve Wisconsin’s best interests in a similar way. While any free trade agreement is only as good as the fine print – and how its provisions are enforced – the concept of a larger free trade zone for the Americas should benefit citizens in all of the affected nations.
Two recent events underscore how Wisconsin’s trade compass is oriented:
- n Gov. Jim Doyle returned in March from a trade mission to Mexico, where Wisconsin exports climbed 35 percent to $1.03 billion in 2004. Wisconsin participants on the mission represented manufacturing, agriculture, technology, environmental remediation and other sectors of the economy. For all the clamor over jobs that moved to Mexico – and some have – new jobs are being created in Wisconsin as Mexico’s economy matures and its demand for goods and services grows.
- The first Canada/Wisconsin Technology Cooperation Symposium was held March 15 in Madison, with representatives from leading academic institutions and companies from Toronto, Montreal and Edmonton exchanging ideas with technology leaders in Wisconsin. Opportunities for joint ventures abound, especially in the life sciences and energy. Already, medical equipment, telecommunications equipment, chemicals and high-end machinery are among Wisconsin’s leading exports ($4.9 billion in 2004) to Canada.
The Central America Free Trade Agreement will spur trade in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, as well as in the Dominican Republic. More than 80 percent of U.S. exports of consumer and industrial goods will become duty-free in Central America immediately, with remaining tariffs phased out over 10 years. American export sectors likely to benefit include information technology, agricultural and construction equipment, paper products, chemicals, and medical and scientific equipment.
That’s a shopping list that reads a lot like what Wisconsin manufactures, grows and sells. Even without CAFTA, Wisconsin exported about $116 million in goods and services to CAFTA countries in 2004.
Other potential export industries include education – Wisconsin has a superb “K-through-gray” educational system, which could be exported via distance education – and health care. Quality health care systems and management would go a long way toward improving life in parts of Central America.
The burgeoning trade deficit is cited by opponents of CAFTA as a reason to reject the agreement. That logic doesn’t hold. The trade deficit exists because the United States is at a zenith as a consuming nation; other economies have yet to reach that point. Eliminating trade barriers can build markets where none now exist is the first step toward reducing the trade deficit.
While there have been vigorous complaints about NAFTA, particularly from those who believe it has accelerated the loss of manufacturing jobs, the statistics portray a more balanced picture. Free trade is a part of saving the Wisconsin right now, not ruining it. Unless there are new markets created for Wisconsin goods and services, Wisconsin companies will bleed profits and jobs. We cannot sell all of our products in Wisconsin – or the United States, for that matter. Growing markets are a necessity for a growing economy.
Wisconsin’s congressional delegation should support CAFTA. It will open new markets, help develop stronger economies (and democracies) in our region, and create jobs for Wisconsin workers. Let’s keep the trade compass pointing in the right directions.
—Still is president of the Wisconsin Technology Council, which is the independent, non-profit science and technology adviser to the governor and the Legislature and the leading catalyst for tech-based development in Wisconsin.
